Major Currencies Overview
Stronger Fed tightening expectations thanks to the FOMC minutes pushed the Greenback higher for the most part of the week but trade jitters forced it to return some gains later on.
Weaker oil prices and resurfacing trade troubles weighed on the Canadian dollar in the previous week, although BOC tightening expectations found support.
EUR & CHF
The Italian budget drama ain’t over as the latest episodes featured rejection and credit rating downgrades. Meanwhile, the franc turned out a net loser as risk appetite was still in play.
Euro price action could keep taking cues from Italy’s situation, but the spotlight would likely turn to the ECB decision and presser as well. Read more.
The British pound was feeling extra heavy last week as it found itself at the bottom of the forex pile on weak CPI and retail sales data. It didn’t help that the EU Summit wasn’t all too positive on a Brexit deal either.
There’s not much in the way of top-tier data from the U.K. this time, which means that traders could keep their eyes glued to Brexit-related developments (or lack thereof). Read more.
The Japanese yen was a net winner for the previous week but it appeared to take most of its cues from its counterparts.
The Aussie held on to its strong standing from the other week and finished in second place last time, lifted by the prospect of the WTO challenging U.S. steel and aluminum tariffs on China.
There are no major reports due from the Land Down Under this week, which means that the focus could stay on WTO developments and risk appetite. Read more.
The Kiwi extended its reign as the king of pips for yet another week, lifted by dollar weakness and stronger risk appetite.
Can it go for another week on top? New Zealand’s trade balance is due but apart from that, there are no major catalysts on deck. Read more.
Charts to Watch:
First up is this classic break-and-retest scenario starting to unfold on the daily time frame of NZD/CHF. Price previously tumbled below support around the .6750 minor psychological mark, which might hold as a ceiling on a pullback since it lines up with the 50% Fibonacci retracement level. Stochastic is dipping into overbought territory, though, so sellers might even return at the 38.2% Fib.
Here’s one for the short-term traders out there, also looking for a textbook support-turned-resistance play. GBP/AUD has pulled up to the top of its descending channel on the 1-hour chart and looks ready to resume the drop since stochastic is in the overbought zone. If so, the pair could aim for the channel bottom around the 1.8150 minor psychological mark or at least the latest swing low.
Reversal alert! This pair just bounced off the bottom of its long-term ascending channel seen better on the daily or weekly charts and seems to be setting its sights on the top. Price has yet to clear the mid-channel area of interest, though, and it doesn’t help that stochastic might be turning south from the overbought zone. Still, a break of the inverse head and shoulders neckline appears to have taken place, so buyers could keep pushing higher.